Transition Finance Weekly - 3/13/2025
Southwest Solar Policy, Pentagon’s Climate Purge, Pro-IRA Republicans
1. The Tortoise and the Hare: State Policy Wins the Southwest Renewables Race
With very different policy environments, Arizona and New Mexico see very different results.
The share of New Mexico’s electricity from solar and wind has gone from 6% to 64% in 14 years, and while that’s largely due to technology improvements and scaled manufacturing making renewables cheaper, renewable-friendly state policy has mattered, too. State legislators have prioritized investments and partnerships that make New Mexico a clean-energy-friendly state (especially solar).
Meanwhile, solar only accounts for 10% of Arizona’s energy generation. That’s mostly because legislators and utility regulators are taking active steps to slow it down (or the cost savings it brings), making the state a laggard. The Arizona Corporation Commission even moved to eliminate energy efficiency and renewable energy targets for utilities under the guise of attacking “ESG.” This is all the more stark when you consider that Arizona is tied for first (with Nevada) in potential solar capacity.
One side effect: electricity is $215 per month for residential customers in Arizona on average, while it’s $185 in New Mexico.
2. House Republicans Suddenly Love Clean Energy Tax Breaks
Republicans don’t want to make their home districts pay for tax cuts.
House Republicans are eyeing $2 trillion in budget cuts to help offset part of their tax giveaway to the wealthy, and IRA clean energy tax incentives are likely on the chopping block, with House Budget Chair Cody Arrington (R-TX) calling the IRA’s clean energy investments “low-hanging fruit.” But not everybody in his party is on board: in state after state, GOP legislators are worrying about the economic impact of cuts.
21 House Republicans sent a letter to Ways and Means Chair Jason Smith (R-Mo.), warning their votes for these cuts aren’t guaranteed, with Rep. Andrew Garbarino (R-NY) saying, “Don’t just think you can repeal these things and have our support.”
Why? Because the vast majority of IRA funding has gone to red states and districts, boosting the local economy, creating jobs, reducing energy costs, and incentivizing billions in corporate investment.
3. Trump’s Climate Program Purge at the Pentagon
Sec. Hegseth and DOGE stand ready to gut DOD climate and energy programs.
The Trump administration has launched a war on all things climate. In an assault on national security, Defense Secretary Pete Hegseth has directed the DOD to eliminate spending on “so-called ‘climate change’ and other woke programs.” These include critical resilience efforts designed to protect American military infrastructure and servicemembers.
The DOD has known for years that climate change and fossil fuel reliance cost Americans billions and put servicemembers at risk:
In 2018, Hurricane Michael caused $5 billion in damage to Tyndall Air Force Base.
In Iraq, U.S. forces required 5,133 fuel resupply convoys per year—and every 24 fuel deliveries resulted in one casualty.
The cost of delivering fuel to remote outposts in Afghanistan was estimated at $400 to $1,000 per gallon.
Cutting these climate programs requires the DOD to ignore the risks to our national security—and our soldiers—from extreme weather and fossil fuel reliance. Never mind that on-site renewable energy, microgrids, and energy efficiency are readily available, practical solutions. Hegseth has seemingly decided that the DOD shouldn’t be prepared for these risks or be able to take advantage of emerging technologies.
4. Right-Wing States Rush to Ban Clean Energy
Anti-renewable bills hit legislatures across the country.
At a time when energy demand is surging and costs are climbing, several states are trying to ban or restrict renewables, even in places where wind and solar already provide a large share of electricity. Examples:
Oklahoma and Arizona are considering legislation to put massive restrictions on zoning for wind and solar projects (even though Oklahoma gets nearly half its energy from wind and Arizona leads the nation in potential solar capacity).
Wisconsin and Idaho may follow Florida (which barred new offshore wind) and Ohio (which allows counties to entirely ban solar and wind projects) to effectively ban some kinds of renewable energy.
Texas (the nation’s top state for renewable generation) is saddling up to require utility commission approval for wind and solar projects (which fossil fuel projects don’t have to do), and Missouri wants to increase taxes on solar projects.
Jael Holzman for Heatmap: “State legislatures are now a crucial battleground for the future of renewable energy, as Republican lawmakers seek massive restrictions and punitive measures on new solar and wind projects. Once a hyperlocal affair, the campaign to curtail renewable energy development now includes state-wide setbacks, regulations, and taxes curtailing wind and solar power.”
5. The First “Made in America” Solar Supply Chain is Operating
But killing the CHIPS Act might break it.
Solar energy buildout requires hyper-pure solar-grade polysilicon, a tricky-to-manufacture component whose production China currently dominates. IRA, CHIPS, and the Bipartisan Infrastructure Law (BIL) were aimed at fostering domestic production to support America’s energy security and technology buildout. And it’s been working.
Example: Suniva, the first U.S. company to start making high-efficiency monocrystalline silicon solar cells, and North American manufacturer Heliene recently partnered with Corning to provide the U.S. market with a solar cell with up to 66% of domestic content, a boon for developers looking to benefit from the IRA’s Investment Tax Credit (ITC) bonus.
But these partnerships to bring critical technology to market are in the nascent stages, and swashbuckling from the Trump Administration and Republicans eager to axe IRA incentives for political purposes put them at risk. Without them, the U.S. will continue to be dependent on Chinese manufacturers for critical energy components.
Federal Reserve Bank of Minneapolis Warns of Property Insurance Crisis
The national insurance crisis is hitting across the country – even in places like Minnesota that you might think of as climate havens. A new report from the Federal Reserve Bank of Minneapolis details how insurance premiums are skyrocketing across the northern plains states, putting a strain on residents and a cramp in the housing market: “On average, property insurance premiums in 2024 were double those of 2021, more than six times the increase in the Consumer Price Index over the same time period.”
Homeowners are paying more for worse coverage, and insurers are adding exclusions and carveouts to policy terms. Policies that don’t cover things like wind and hail damage leave more people financially and physically vulnerable to damage from extreme weather.
And renters pay, too, as insurers raise rents and shave operating expenses to cover higher insurance costs – or as they see their homes damaged or destroyed with no recourse if their landlords cut coverage.
Jordan Haedtler, climate financial policy strategist at Climate Cabinet, for El Observador: “Some of the most dramatic hazards have been from wind and hail storms in states like Iowa and Minnesota, not just hurricanes in Florida or wildfires in California. And this is not just a problem for homeowners; landlords can and do pass on insurance costs to renters . . . You don’t have to wait for a crisis to see that it’s a huge issue.”
